Most of you hailing your APC and SW governors for investing borrowed money into infrastructure do not understand business finance and how a better understanding of business finance can help us better manage our public finance.

In business finance, borrowed money are invested into things that generates income

When borrowed money is invested into infrastructures that do not yield money or enough money to pay back, it is a bad debt which the states govts try to write off by collecting heavy multiple taxes or using their federal allocations.

What the states govt should have done first was to invest the loan into things that can generate enough profit to wipe off the loan and fund non/low income infrastructures.

Eg it is wise a govt invest $1million borrowed money into a profitable venture that can generate a yearly (after tax/loan interest) net profit of $100 thousand. Then using the $100 thousand to

1) Build those non/low income infrastructures in stages even though it will take longer time.

OR

2) Secure another loan whose yearly interest do not exceed $100 thousand. This loan will then be used to build non/low income infrastructures, while the $100 thousand will be used to wipe off its yearly interest in order to prevent accumulation. The taxes collected from people will be used to reduce the loan which in turn will lead to a cut down on the loan's yearly interest making it possible to start diverting gradually the $100 thousand into helping the taxes further reduce the loan and its interest.

A good govt borrowing will ensure that half of all the loans collected is invested into profitable ventures whose yearly profits is large enough to

1) Clear the loan and its interest

2) With the help of moderate taxes, clear other loans and interests

FOR THOSE OF YOU SUPPORTING BORROWING ASK YOURSELVES

Do your states govt have a strategy to offset these loans and its interests without resulting to heavy multiple taxations and federal allocations.

They are tinubu urchins

Not happy with that?

Please visit www.how-to-commit-suicide.com.

...and I assure you you will get your problems solved !!!!

StBlack1: Not happy with that?

Please visit www.how-to-commit-suicide.com.

...and I assure you you will get your problems solved !!!!

Maybe you are a baby during OBJ's era when the govt was begging paris club for debt cancellation.

Shouldn't you learn how to spell 'borrowing' first?

pheliciti: Shouldn't you learn how to spell 'borrowing' first?

Thanks

You will make better contribution if you can help Nigerians see the danger ahead especially those hailing this poor public finance method because of party interest

EasternLeopard:

Maybe you are a baby during OBJ's era when the govt was begging paris club for debt cancellation.

PLS visit my last post.

Shineke bless your effort as you do that !!

Imo zuzuru adigo mma oo.

StBlack1:

PLS visit my last post.

Shineke bless your effort as you do that !!

Imo zuzuru adigo mma oo.

Sorry for the mixed up

OP excellent analysis, however your motive will be misunderstood.

E.g is Peter Obi who invested in revenue generating enterprises whose returns are now being ploughed back into the economy. Of course he had a lot of shortcomings but debt isn't one of them.


Bad examples abound.
From Fashola to Aregbesola

If the states do not invest in revenue generation then they will keep coming cap in hand.

IT'S THOSE INFRASTRUCTURE YOUR FELLOW HEADS SAW THAT MADE THEM TO COME DOWN IN MASS TO SOUTH WEST TO SURVIVE, HUSTLE..

DID ABIA GOVERNOR INVEST THE ALLOCATION GIVEN TO HIM JUDICIOUSLY?

Igbos can go the DO THE NEEDFUL...... kiss the toto of Amadioha's wife !!!

Shineke crown ya efforts oooo. !!!

jagaban1: IT'S THOSE INFRASTRUCTURE YOUR FELLOW HEADS SAW THAT MADE THEM TO COME DOWN IN MASS TO SOUTH WEST TO SURVIVE, HUSTLE..

DID ABIA GOVERNOR INVEST THE ALLOCATION GIVEN TO HIM JUDICIOUSLY?

In my post, I never praised SE governors

My advise is that, we shouldn't allow politics blind our responsibility to call our govt to order.

Poverty caused by poor public finance management pities neither pro APC or pro PDP members.

My brother I will be grateful if you suggest an intelligent way to avoid bad debts.

EasternLeopard:

Maybe you are a baby during OBJ's era when the govt was begging paris club for debt cancellation.

if u acknowledge the effort of OBJ on debt cancellation what did ur GEJ till 2019 do? He incurred more debt than is necessary. I will suggest u follow the recommendation given to u or simply jump into the lagoon.

danot1030: if u acknowledge the effort of OBJ on debt cancellation what did ur GEJ till 2019 do? He incurred more debt than is necessary. I will suggest u follow the recommendation given to u or simply jump into the lagoon.

So because you believe GEJ is incurring debt, so SW govts should follow suite

I pity your myopic way of reasoning

Already we in the east are questioning our leaders over borrowing which is the reason why Anambra former governor boasted of not incurring debt and yet managing the state finance wisely

OP

Why your fixation on SW now?

Are they the only ones owing?

Check the chart again......

Anambra Adigo Mma.

The OP made a very important point. Borrowing huge sums of money in the name of infrastructural development is counter productive as far as the economy of a state is concerned. What it means is that debt will be pilled up gradually through interest and other charges until the State Government is overwhelmed by it.

From observation over the years, I realized that the major problem facing Nigeria is not corruption per say but lack of strategic investment and development. Strategic development in this case means investing in key sectors with huge impact and capacity for a sustained economic development. This is the bane of our underdevelopment.

Take for instance Agriculture. The first step towards industrialization is Agriculture.This sector alone has the capacity to generate huge income to the states far more than oil. If only state governments especially northern states would realize the gold mine awaiting to be explored in Agric sector the better for everyone.

I would rather prefer a situation where a state Governor borrow funds for the purpose of agricultural development to using it on building roads that may not have a direct impact on the economy.

Please confirm the debt profile of the US before writing things, can development (not growth) happen without infrastructure?

CocoaMerchant: OP

Why your fixation on SW now?

Are they the only ones owing?

Check the chart again......

Anambra Adigo Mma.

My fixation stem from the support given to it instead of the people asking the govt to explain how they plan to pay back

EasternLeopard:

My fixation stem from the support given to it instead of the people asking the govt to explain how they plan to pay back

except you're part of d people to bear d debt it's still none of your business

OseghaleEbosele: Please confirm the debt profile of the US before writing things, can development (not growth) happen without infrastructure?

Do you think China became the 2nd world economic power next to america by incurring bad debt

Do you know that US owes China lots of money

Pls do you know the difference btw bad and good debts

docsholz: except you're part of d people to bear d debt it's still none of your business

Now this is a characteristics of people who refuses to listern to fact only to turn around and blame people witches wizards etc for their failure

Son

As long as I have SW friends who love Easterners, I will alert them to dangers like this not for your sake but for my friends sake

EasternLeopard:

Now this is a characteristics of people who refuses to listern to fact only to turn around and blame people witches wizards etc for their failure

Son

As long as I have SW friends who love Easterners, I will alert them to dangers like this not for your sake but for my friends sake

bigot, your friends no get phone? feel free to call them



and I'm not ur son

EasternLeopard:

In my post, I never praised SE governors

My advise is that, we shouldn't allow politics blind our responsibility to call our govt to order.

Poverty caused by poor public finance management pities neither pro APC or pro PDP members.

My brother I will be grateful if you suggest an intelligent way to avoid bad debts.

MY BROTHER, YOU ARE PRAISING SOUTH EAST GOVERNORS INDIRECTLY. WHY DID YOU WRITE SOUTH WEST ?

docsholz: bigot, your friends no get phone? feel free to call them



and I'm not ur son

Sorry it hurts you that

I just proved that APC is not a better alternative for SW let alone Nigeria

They are clueless like their arch enemy

EasternLeopard:

My fixation stem from the support given to it instead of the people asking the govt to explain how they plan to pay back

Okay Bro.

But what about your State?

its better to take comedian basketmouth serious than taking APC serious

CocoaMerchant:

Okay Bro.

But what about your State?

The leadership is worst

2015 we are kicking him out

EasternLeopard:

The leadership is worst

2015 we are kicking him out

Okay. Got it.

jagaban1: IT'S THOSE INFRASTRUCTURE YOUR FELLOW HEADS SAW THAT MADE THEM TO COME DOWN IN MASS TO SOUTH WEST TO SURVIVE, HUSTLE..

DID ABIA GOVERNOR INVEST THE ALLOCATION GIVEN TO HIM JUDICIOUSLY?

Obviously Abia state governor is a failure.

However, an even more devastating situation is looming where these state governments accrue bad debts up to the point that they are unable to function, in other words they become mere liabilities to the FG.

One has to balance revenue with debt.

By investing in infrastructure that can yield revenue.
Not just shallow "wonder" projects.

eaglechild:
Obviously Abia state governor is a failure.

However, an even more devastating situation is looming where these state governments accrue bad debts up to the point that they are unable to function, in other words they become mere liabilities to the FG.

One has to balance revenue with debt.

By investing in infrastructure that can yield revenue.
Not just shallow "wonder" projects.

God bless youuuuuuuuuu

Most don't know what is called bad debt

Emergency economists!

You can borrow to invest in infrastructure particularly in areas conducive to economic activities like Lagos. The infrastructure facilitates more activities and people and companies and businesses gravitate to those areas. The government then increases taxes, levies and the likes (generates more income) to service the loan (interest and principal). The businesses make sufficient enough profits and returns and are able to pay the taxes comfortably. And so the multiplier effects continues, property prices rockets, valuation rockets, everything goes up as more and more people and corporations are drawn to the area (including immigrant traders), the government is the able to widen the tax net to cover more activities, property taxes, shop levies, the government's income increases exponentially (ask Ambode the next governor of Lagos State)

Obviously if you are empty Aqua Ibom State (or any of the economically un-viable states) and financing infrastructure through borrowing, then your analysis may be correct.

In terms of Lagos, sorry your analysis is a bit of a nonsense.

deeobserver209: The OP made a very important point. Borrowing huge sums of money in the name of infrastructural development is counter productive as far as the economy of a state is concerned. What it means is that debt will be pilled up gradually through interest and other charges until the State Government is overwhelmed by it.

From observation over the years, I realized that the major problem facing Nigeria is not corruption per say but lack of strategic investment and development. Strategic development in this case means investing in key sectors with huge impact and capacity for a sustained economic development. This is the bane of our underdevelopment.

Take for instance Agriculture. The first step towards industrialization is Agriculture.This sector alone has the capacity to generate huge income to the states far more than oil. If only state governments especially northern states would realize the gold mine awaiting to be explored in Agric sector the better for everyone.

I would rather prefer a situation where a state Governor borrow funds for the purpose of agricultural development to using it on building roads that may not have a direct impact on the economy.

God bless you

Especially when you made this comment

" From observation over the years, I realized that the major problem facing Nigeria is not corruption per say but lack of strategic investment and development. Strategic development in this case means investing in key sectors with huge impact and capacity for a sustained economic development. This is the bane of our underdevelopment."

I wonder what will become of Odua republic if this public finance method is applied by the govt of Odua.

We Biafrans must also warn our leaders never to plough borrowed money into non direct profitable ventures and if situation demands that they do, then they must borrow extra which must be invested into profitable ventures whose profits are sufficient enough with the help of low single taxes to wipe off both loans and their interests.

It is unfortunate our graduates of economics have not written articles on mass media to warn our people and govt of such bad public finance

States govts behave like a man who in order to appear rich, decides to live on bank loans to finance this life with the promise to use his salary to pay back without putting into consideration the possibility that the company he works for might suffer poor sales over a long period forcing the company to reduce his salary

If oil sales reduce for a long period of time, we will have less for development because we will spend more on debts we must pay for.